(Bloomberg News) The former chief executive officer of a New Jersey hedge fund pleaded guilty to a charge he conspired to defraud investors of more than $4 million, federal prosecutors said.
Michael J. Spak, 44, of Chesterfield, New Jersey, entered his plea today before U.S. District Judge Joseph H. Rodriguez in Camden to one count of conspiracy to commit wire fraud, U.S. Attorney Paul Fishman said in a statement.
Spak and his co-conspirators were accused of soliciting investors for the Osiris Fund, which they pitched as a hedge fund for "little guys" and "mom and pops," and then improperly diverted $4 million for their own use starting in January 2010, prosecutors said.
Spak and his co-conspirators spent $300,000 on a sport fishing boat called the "Fintastic," while continuing to list the funds as assets, prosecutors said.
The fund incurred trading losses of about $4.5 million in April and May 2010, about half of its value, yet Spak and his co-conspirators never disclosed the losses, prosecutors said. Instead, they created false financial statements that they sent to investors that included a fictitious $5 million asset for which they charged a 3 percent management fee, prosecutors said.
Spak faces as much as 20 years in jail and a $250,000 fine at his sentencing, scheduled for Jan. 9, prosecutors said.
The case is U.S. v. Spak, U.S. District Court, District of New Jersey (Camden).